Modern Fairy Tales

By Cesar Fernando Lumba

There was a time, when only the true scholars were being published, we could trust the books we read were actually giving us the right information. Today, with the explosion of print media and the virtual flooding of the cloud – cyberspace – with opinions and so-called “facts” from the unschooled, uncouth and unorthodox, it is often difficult to discern who is telling the truth and who is giving us BS.  No, I don’t mean Bachelor of Science.

Because of the Internet, and because of the explosion of print media, we are now being hammered and blindsided by everything from philosophical treatises to fairy tales.

Let me tell you, today, about the fairy tales.

Fairy tale number one: There is a free market on the global stage. Many of our leaders tell us that there is such a thing as an international free market.  The truth? It’s an unfair and merciless jungle out there.  Countries such as China are restraining trade through currency manipulation, through banning of competitive businesses, through the ban on exports of rare earth metals, through price undercutting, through the theft of trade secrets, etc.

Many U.S. politicians believe the dictum, “let the markets decide,” and this has led to the theft of our manufacturing and its transfer to China and some other countries.  China and those countries restrict our movement in their markets while we let them into the American market to do as they please, under the excuse of “letting the markets decide and not letting the U.S. government interfere with the process.”

The result is that the U.S. government is handcuffed from interfering with the process of closing factories in the U.S. and opening up factories in China and other countries, even as those foreign manufacturers  turn around and sell their products in the lucrative American market.

It’s not right, it’s not fair to our children, yet the U.S. government is powerless because the strong lobby for a “free international market” has U.S. legislators and even U.S. presidents in their pockets.

The sooner we as a country realize that the free international market is a mirage, the sooner we will be able to address the number one economic problem of the U.S. – the loss of manufacturing jobs to foreign countries.

Fairy tale number 2:  Countries that tax their people heavily discourage innovation, investments and industry. Well, what do we know?  Canada has just surpassed us in terms of standard of living and per capita income.

The Canadians are heavily taxed because their country is a quasi-welfare state. But instead of being discouraged by high taxes, the Canadians are happily doing their part in making their country a model of good and effective governance and responsible citizenry.  Canadians, far from being discouraged by higher taxes, have one of the highest productivity levels in the world.

Higher taxes would also mean that the U.S. will be able to modernize its infrastructure.  We will have modern roads and bridges and bullet trains and modern, renovated airports.  We will be competitive with China, our number one rival currently, and which is poised to surpass us economically.

Fairy tale number three: Welfare states are doomed from the start because of the high burden imposed on their citizens.  This fairy tale has a celebrated modern-day philosopher, Ayn Rand, who claims that the movers and shakers of this country – the top 1% – are carrying a tremendous load and if that top 1% simply moves, or shrugs, the world would fall with a loud thud.

Well, what do you know?  The Scandinavian countries tax their people to the hilt in order to finance a welfare state that gives their people security from birth to retirement and yet the Scandinavians are some of the happiest people in the world and have per capita incomes that are significantly higher than the American per capita income.

People in the United States are struggling in the midst of record GNP levels. Why?  Because nearly all the record-level income increments are going to the top !%, while the middle class is feeling the downward pull of insecurity in their lives, and the poor are getting poorer.

We have to tax the top 1% – top 5% – more heavily to bring the national budget closer to balance.  Those people don’t create jobs in the U.S. – they create jobs in China – and those whose income comes primarily from investments are not contributing to American productivity.

The stock markets are at record levels, the ultra-rich are getting richer, yet they are avoiding paying taxes in the U.S. by locating their companies and operations outside the country.

Fairy tale number 4:  If we let the principle of comparative advantage work on the international stage, it will be better for everybody because products will be manufactured efficiently and each country will produce only the products that it has an advantage in producing.

This is a fairy tale because there is a country – China – that has a huge, insurmountable advantage in labor costs, and this advantage trumps all other advantages and every country that competes with China loses its shirt.  Next, there’s India that is ready to fill in if the Chinese start losing their labor cost advantage.

The U.S. must reduce China’s absolute advantage by requiring that companies that manufacture in China must manufacture some of their products intended for the U.S. market in the U.S.

We should make this a condition for those companies to continue marketing in the U.S.  If those companies fail to do so within a reasonable amount of time – five, seven or ten years – those companies’ products will be slapped huge tariffs that will render such products un-competitive in the American market.

Fairy tale number 5: Illegal immigrants are a drain on the U.S. economy. Most serious studies show that illegal immigrants enrich our culture. They contribute to Social Security while not receiving benefits from the system.  They pay their taxes religiously.  They are keeping the farms in business, for without the migrant farm workers many American farms will either go out of business or curtail their operations substantially.

Motels, restaurants, markets and other businesses cannot make ends meet without low-cost illegal immigrant labor.

In addition, immigrants supply the U.S. with new young Americans and this delays if not reverses the aging of the American population.  You want to know who will prop up the retiring American seniors, the baby boomers who are retiring by the millions as we speak?  Look no further than the millions of young immigrants who have come to this country as children but are now of college-age and are ready to snap up the jobs that are being created but not being filled because Americans are not having enough children anymore.

Bottom line:  we need the immigrants to work the floors of the new factories that are sure to be set up as American manufacturing comes back in droves because of American sentiment for returning manufacturing to their rightful home:  in the industrial rust belt, in the suburbs of Pennsylvania and New York, in the resurgent southeast, in California, Oregon and Washington.

All over this land.

It is important that we disabuse ourselves of all these fairy tales.  We have to, if we are to move forward as a country, as a people, as leaders of the world.

(I welcome all comments, even ones that are meant privately only for my own eyes.  If you have comments that are meant only for me, shoot me an email at lumbacesar@gmail.com.)